headerads

By clicking submit, you agree to the Disclaimer and consent to receive emails from us. ?php>

Monday, October 22, 2012

Advanced Micro Devices, Inc. (NYSE:AMD) downgraded on bleak prospects

Chip makers are not in good shape with demand for
desktops and traditional computing devices slowing a sluggish trend.

Advanced Micro Devices, Inc.(NYSE:AMD) reported
earnings and revenues and lagged analyst estimates, sending the shares of the
company down about 16 percent.

Chief Executive Rory Read, talking to analysts after
the results were announced, said that the company was facing challenging
selling environment due to the global macroeconomic weakness and also a
slowdown in PC sales and original equipment makers had deferred sales ahead of
the expected launch of Microsoft's Windows 8 operating system.

He said that AMD had to "build a more efficient
operating model,” and “we must diversify behind the traditional PC market and
become a leader in fast-growing and adjacent markets where we can differentiate
and create leadership.”

Read said the company had identified areas such as
“cloud computing” infrastructure, video game machines, embedded chip
applications, and tablets and a “new breed of entry-level notebooks” that can
benefit from AMD’s energy-efficient processors.

The stock has been downgraded by analysts who have not
been impressed with what Read had to say.

Bernstein Research‘s Stacy Rasgon cut the shares from
Outperform to Market Perform, and FBR Capital‘s Craig Berger also did the same.

According to Rasgon, “We have no further confidence
that any aspect of our prior structural thesis (margin accretion, cash flow,
and balance sheet deleveraging) will play out in the foreseeable future.”

“Indeed, we now see the prospect for structurally
lower margins, as well as cash burn [...] Frankly, the most common adjective
that comes up when we discuss the company with clients is, simply,
‘un-investable.’ We are now believers.”

He lowered his 2013 revenue estimated to $4.87 and a
loss of 41 cents a share, compared to earlier forecasts of 14 cents profit on
revenues of $5.54 billion.